CME Livestock Daily Options Report

By: PJ Quaid, Senior VP, Agricultural Commodities

Fri, 20 Feb 2026, 21:36

livestock options recap

The February 1 Cattle on Feed report confirms an increasingly tight cattle supply backdrop. On-feed inventories came in at 98.2% of last year, slightly below expectations and the lowest February level in nine years, while January placements at 95.3% were well below estimates and the smallest for the month in 19 years. Marketings were in line with expectations at 87.0% but still marked the lowest January in a decade. The key takeaway is that reduced placements today imply even tighter fed cattle supplies into late spring and summer, reinforcing the structurally bullish tone in live cattle. For feed markets, smaller placements signal moderated near-term feed demand growth, but the broader herd contraction narrative remains intact, supporting elevated cattle prices and strong feeder margins despite historically high input costs.

Following the Supreme Court’s decision blocking the use of IEEPA for sweeping tariffs, President Trump quickly pivoted by implementing a 10% global tariff under Section 122 while keeping all existing Section 232 and 301 tariffs in place. He emphasized that the administration has multiple alternative legal tools available — including Sections 232, 122, 201, 301, and potentially Section 338 — and signaled an even more aggressive tariff posture ahead. New Section 301 investigations are expected to begin, with a five-month probe period that could set the stage for additional country-specific tariffs later this year. Trump also indicated that any required tariff refunds would likely be tied up in extended litigation, while trade agreements negotiated under IEEPA may need to be restructured, though he stressed that India remains unchanged. Treasury Secretary Bessent added that revenue from the combined use of Sections 122, 232, and 301 is expected to keep 2026 tariff income roughly unchanged, suggesting the administration intends to fully offset the loss of IEEPA authority through alternative mechanisms.

December PCE inflation came in firm, with headline prices rising 0.4% M/M and 2.9% Y/Y, while core PCE — the Fed’s preferred gauge — also increased 0.4% on the month and 3.0% year-over-year, broadly in line with what Chair Powell had signaled. Personal income and spending were steady, but inflation remains above target, reinforcing the Fed’s bias to hold rates as labor market risks appear to have stabilized. Meanwhile, Q4 GDP slowed sharply to 1.4%, partly due to the government shutdown, though underlying consumer and investment activity remained resilient; price measures within GDP were firm. February S&P Global Flash PMIs softened across manufacturing and services, pointing to the slowest growth in ten months and suggesting Q1 GDP tracking closer to 1.5%, though some of the slowdown may prove temporary. Overall, the data reflect a cooling but not collapsing economy, with inflation still sticky enough to keep the Fed cautious in the near term.

February Michigan Consumer Sentiment edged up slightly to 56.6 from 56.4 but remained below expectations, reflecting still-weak confidence levels. Current conditions improved modestly, while expectations were little changed, reinforcing the view that consumers see little meaningful shift in the economic backdrop. Notably, short-term inflation expectations fell sharply to 3.4% from 4.0%, while five-year expectations held steady at 3.3%, offering some relief on the inflation psychology front. Despite sentiment lingering near historically low levels, economists at Oxford expect consumer spending to remain resilient, projecting consumption growth of roughly 2.5% in 2026.

Hogs

Sold 200 Feb 90 calls @ 3.350 covered 84.20

Bought 125 June 100 puts paid 1.6750

Sold 300 Aug 112/130 call spread 3.40 down to 3.30

Bought 150 Feb 84 calls paid 5.9750

Bought 200 Aug 210 puts paid 2.650

Sold 100 Aug 226/246 strangle @ 10.225 down to 10.150

Live Cattle

Sold 1000 April 230 puts @ 1.625 down to 1.525

Bought 250 March 240 puts paid 2.00

Sold 300 March 230 puts @ .55 down to .525

Bought 350 April 240/230 put spread paid 2.600

Bought 300 June 233/224 puts paid 2.525 covered 237.40

Bought 200 March 242 calls paid 3.10 up to 3.1750

Sold 2501 March 250 calls @ .650

Sold 1000 Oct 232/226 put spreads @ 2.2750 down to 2.075

Sold 300 April 240 puts paid 3.675 down to 3.55

Sold 200 June 240 puts 8.10 down to 8.075

Feeder Cattle

Bought 100 March 366/376 call spread paid 4.90 up to 5.00

Sold 550 May 390 calls @ 2.2250 down to 2.05

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Meats & Livestock

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